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The Benefits of a RESP

We all want the best for our kids and grandkids, and we do everything that we possibly can to support them. However, figuring out the best method to save up financially to support them can be a challenge. Starting a Registered Educational Savings Plan (RESP) is one of the best ways to achieve this goal. There are many benefits to an RESP that can help you and your child or grandchild pay for their education.


One of the greatest benefits of an RESP is the government grant money that gets deposited into the account. For every dollar you invest, the government will put in 20 cents; that’s an instant 20% growth in your investment! The maximum amount of grant money that you can receive each year is $500 per child, up to a life-time maximum of $7,200. If you did not get started right away, you can still receive grants until your child’s 17th birthday, and you can even buy back previous years’ grants. This grant money can be invested just the same as your monthly or annual deposits and allows you to achieve greater growth in the account.

Withdrawal date

Another benefit of an RESP is that you don’t have to use the account funds right away. If your child or grandchild decides to not attend post-secondary school right away, you can keep the account open until the 31st year after opening the account. This means that the account can still remain open and continue to be invested in the market, achieving financial gains to help cover the costs of their education. You can even continue to deposit money into the account, without receiving grants, until their 25th birthday.

Closure of the account

When the time comes to withdraw funds for their education, your child or grandchild ends up paying the tax on the portion that is taxable (i.e. the grant money and interest earned). Since they are in school and likely not earning a significant salary, they will be taxed at the lowest levels. If there is money remaining in the account after they have completed their post-secondary education, it is not lost. Any deposits you made can be withdrawn tax-free back to you, the grant money will be returned to the government, and any growth can be rolled over tax-free to your RRSP.

In addition to these features, you can also have multiple children or grandchildren sharing one account, rather having an individual account for each child. Also, anyone can contribute to the account, which allows uncles, aunts, grandparents and other family members to contribute. Take the time now to open an RESP, or if you have one already, continue utilizing it for all of its benefits.

Talk to your financial advisor. Get in touch.

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